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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (140)	6/20/2000 9:44:00 AM
From: Stephen O	Respond to of 2131

Global Copper Demand Seen Exceeding Supply This Year London, June 20 (Bloomberg) -- Global copper consumption will exceed supply this year for the first time in five years as producers fail to keep up with demand from house builders, an industry group said. The International Copper Study Group, a Lisbon-based researcher set up by the governments of 24 copper producers and consumers, projected the shortfall at 82,000 metric tons. ``The forecast accounts for supply disruptions and an expected shortfall in mine production available for conversion to refined copper,'' the group said. ``Cutbacks in mine output and deferment of new projects have led to the projected shortage.'' Starts of multi family homes in the U.S., the world's biggest copper user, rose 2.1 percent in May, following an 11 percent gain in April. Builders use copper for pipes and wiring. Copper for three-month delivery fell as much as $9, or 0.5 percent, to $1,796 a metric ton on the London Metal Exchange today after rising for five straight trading days. Copper has rallied more than 5 percent in the past two weeks. Global copper consumption will likely rise 3.9 percent to 14.76 million tons this year, outpacing output, expected to grow 2.1 percent to 14.68 million tons, said Thomas Baack, the ICSG's chief statistician in Lisbon. Outlook Next year, the deficit may widen almost four fold, to 300,000 tons as production expands a further 2 percent while demand grows 3.9 percent, the group said. Copper inventories, as monitored by the LME, have dropped 32 percent since March 8, falling every trading day but one. The inventories now stand at 573,800 tons, the lowest level since December 1998. Copper producers idled some mines last year to shore up copper prices, which fell to a 12-year low in May 1999. The metal has risen more than 26 percent since then as economic growth in the U.S., Asia and Europe whipped up demand. ``We'll definitely see a copper deficit, but how big will it be?'' said Kevin Norrish, a minerals economist at Barclays Capital. ``The key factor is what's going to happen in the U.S. in the second half of the year.'' If economic growth in the U.S. slows down considerably while companies restart idled mines, the 2001 copper deficit will be smaller than the group has predicted, he said. Similar to copper, aluminum for three-month delivery has rallied 9 percent during the past two weeks, boosted by rising demand and smelter shutdowns in North America, caused by high energy costs. Meanwhile, nickel has shed 22 percent since the end of May as workers at the world's second-largest producer Inco Ltd. dropped plans for a strike, easing concerns about nickel supplies. --Vladimir Todres in the London newsroom (44 20) 7673 2347, or at vtodres@ bloomberg.net/jah/jxc

To: Robert Douglas who wrote (140)	7/5/2000 6:47:45 AM
From: tyc:>	Read Replies (1) \| Respond to of 2131

>>I don't expect inventories to fall to the critical levels of the mid 1990 years. There is just too much capacity to allow for it. Your remarks comparing today's situation with the mid nineties were interesting and valuable. I would appreciate a little more of your insights. LME warehouse stocks have now fallen 300,000 tonnes in four months. IF total world demand for copper is 15,000,000 tonnes per annum, the current level of LME warehouse stocks would represents less than 2 weeks' consumption, (according to my arithmetic!). ..To what extent can LME warehouse stocks be used as a gauge of the world's supply/ demand situation ? ..To what level must LME warehouse stocks fall before "critical levels" are reached, bearing in mind that consumption is expected to grow at the rate of 3% per annum ? Perhaps perception is more important than reality. Is it possible that there is considerable disparity between perception and reality ? signed: "A copper Bull"